Insurance costs are rising fast: Can you still afford to have home insurance etc?

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frednz

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#309422 18-Oct-2023 08:14

In an article in "The Post" on 14 October 2023, Nicholas Boyack asked the question:

"How long will insurers stick with Petone?"

It's mentioned in the article that Murray Shaw, who has run a record shop in Petone for 36 years said that the cost of insurance had risen to the point that he no longer had any! He said "you can't stop the sea, it is happening everywhere".

In another example, James Winton said that: "After the Christchurch earthquake in 2012-13, his insurance was $23,160 and before the Kaikoura earthquake it had fallen to $10,730, but this year he is paying $53,260.

A friend of mine who lives in the northen Hutt Valley has recently had her home insurance premium increase by more than 20% and her insurance company said that recent extreme weather events, together with increasing building costs etc are causing large increases in home insurance costs everywhere.

So, have you experienced large increases in your insurance costs? Do you think it will soon come to the point where people simply won't be able to afford to insure their properties and businesses and will have to "self-insure"?

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#3148631 18-Oct-2023 08:36

Our home and contents insurance in Waikato last year was $2200 combined. We renewed this year for $3100. $900 increase. There were no claims from our side and no flooding in Waikato from Auckland floods or Cyclone Gabrielle. Everyone has to cough up to share the claims cost across the country which is how insurances work.

Do whatever you want to do man.

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#3148637 18-Oct-2023 08:45

Hah - I opened GZ this morning with the intent of sharing my annoyance with TradeMe insurance taking the piss with the car renewal I received this morning and I see it is already a hot topic.

They have kindly offered to renew at a $370 annual increase from last year - even though I have made no claims, have a $750 excess and they have reduced the agreed value from $75k to $58k vs 2022.

I am fortunate enough to be able to absorb this for now, but I feel for everyone currently being driven to the breadline through financial "Death-by-1000-cuts" and acknowledge that even those of us who are relatively comfortable are still only one run of bad luck away from destitution.

Life is a bloody rort these days, a superficial change of government will do nothing to fix it and I am not sure if things will ever get better without burning everything to the ground first.

Now off to see if I have to change providers again in order to get any kind of reasonable deal.

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#3148640 18-Oct-2023 08:53

billgates:

Everyone has to cough up to share the claims cost across the country which is how insurances work.

And do you think that insurers will then gladly lower pricing for everyone when this impact has been managed out?

Call me cynical, but I doubt it these days.

Profits and infinite growth above all else is the mantra - there is never "enough" and all corporations will take any lever they can in order to squeeze every last penny out of their customers.

Bluntj

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#3148641 18-Oct-2023 08:54

Insurance is compulsory for most mortgage holders, so it will get interesting. May need a second mortgage to pay the insurance premiums.

SirHumphreyAppleby

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#3148642 18-Oct-2023 08:57

This is one cost of living the government needs to get involved in sorting out. Insurance should only exist to restore people who have suffered a loss to their original position and protect their clients from liability, pursuing costs from responsible persons (where they exist) or their insurers.

Based on our recent experiences, it seems insurance companies line the pockets of third-party assessors who claim for work that is unnecessary, employ sub-par subcontractors who then only do the minimum, often to a poor standard requiring rework.

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#3148643 18-Oct-2023 08:57

Item:

Now off to see if I have to change providers again in order to get any kind of reasonable deal.

A quick online quote has AA offering an annual price $650 more pa than than the TradeMe/Tower renewal.

Unbelievable that an increase of just under 30% (on an asset that has depreciated in insured value by over 20%) is seeming like the most reasonable offer available...

wellygary

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#3148644 18-Oct-2023 08:57

" - even though I have made no claims, "

That's not how insurance work thou....

Its based on the average payout across the fleet they insure, - thousands of cars were flooded and wrecked in Auckland and on the east coast....

There is no magic "pot of gold" that pays out claims, its based on what is paid in (and re insurance).. which is just more global risk spreading...

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Linux

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#3148651 18-Oct-2023 09:18

I have made 1 windscreen claim on my car insurance in the last 20+ years and nothing else and my car insurance went up so much this year I changed it to 3rd party fire / theft

If I crash my car I will just have to buy another!

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#3148654 18-Oct-2023 09:22

wellygary:

" - even though I have made no claims, "

That's not how insurance work thou....

Its based on the average payout across the fleet they insure, - thousands of cars were flooded and wrecked in Auckland and on the east coast....

There is no magic "pot of gold" that pays out claims, its based on what is paid in (and re insurance).. which is just more global risk spreading...

As an insured individual, claims in a policy year would absolutely impact my renewal, had I made any.

...and as above, I will gladly be proven wrong when (in, say 24 months time?) average claims are significantly down YoY, the short term impact of the recent weather claims has been costed out and we all then see our renewals drop by 30-40%. Right?

Yes - I accept that an exceptional claims year does have an impact.

I also believe that it is another useful excuse and lever to maximise profit and squeeze customers and will have no reciprocity when claims are back down again.

frednz

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#3148682 18-Oct-2023 09:38

billgates:

Our home and contents insurance in Waikato last year was $2200 combined. We renewed this year for $3100. $900 increase. There were no claims from our side and no flooding in Waikato from Auckland floods or Cyclone Gabrielle. Everyone has to cough up to share the claims cost across the country which is how insurances work.

Thanks, that certainly is a very large increase of about 41%! With annual inflation running at around 6%, increases like these must surely push up the rate of inflation?

There are some ways to reduce insurance costs, such as getting a larger policy excess and reducing the sum insured. However, one insurance company I looked at has a maximum allowed excess of $1,000, whereas another one allowed excesses up to $2,500.

I see that home insurance rebuild estimates from corelogic.co.nz have two rebuild standards, one is "quality" and the other is "standard". There can be a large difference between "quality" and "standard" rebuild costs, so it pays to check these out. Insurance companies usually increase the sum insured every year, but do you really need to insure for the full likely replacement cost, including demolition fees? And do you need to base your sum insured on a "quality" rebuild as some insurance companies would like?

wellygary

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#3148687 18-Oct-2023 09:47

frednz:

Thanks, that certainly is a very large increase of about 41%! With annual inflation running at around 6%, increases like these must surely push up the rate of inflation?

Yip,

From Stats NZ yesterday,

Between the September quarter 2022 - September 2023, these are the annual % changes to insurance costs

Life insurance 9.6
Dwelling insurance 21.2
Contents insurance 18.8
Health insurance 7.1
Vehicle insurance 10.2

CYaBro

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#3148698 18-Oct-2023 10:20

Yea we've had to cancel our health insurance as it was just getting ridiculous!

House insurance has risen about $1,000 for the year too.

Opinions are my own and not the views of my employer.

MikeB4

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#3148701 18-Oct-2023 10:29

We just did our review of insurances and only had a minor increase in the house insurance. It was increased by $65 per year. We are in Te Awakairangi but well away from any flood or slip zones. We barely get any puddles during heavy rain and we have received a good amount of that this Spring.

Handsomedan

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#3148703 18-Oct-2023 10:38

My experiences of late are that we simply can't be without insurance, regardless of cost.
We couldn't afford to self-insure if things went wrong like they have for us over the last few years.

As much as it keeps getting more and more expensive to insure our house, contents and cars, we've made claims over the last two years that total well in excess of $100k - house and cars.

I'm a firm believer that if you can afford insurance and never use it, it's still not money wasted. BUT - it's getting well beyond the reach of many lower-income earners and that is a problem.

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MikeB4

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#3148704 18-Oct-2023 10:44

Maybe time for the government to start again a state backed insurance company

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